***Disney has since denied any plans to start an airline, however, I am keeping this post active because the ideas explored (should they start an airline) remain valid if they were to start an airline. In the introduction, I mentioned “it’s been reported” or “announced” which remains correct. I also wrote “if true” as Disney had not yet confirmed it publicly.***
It’s been reported that Disney will soon launch their own airline. If true, is this the best or the worst idea they’ve had in recent memory?
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Disney Airline Coming in 2021
It’s been reported that Disney will acquire small regional carriers to form their wholly-owned subsidiary airline. They intend to serve major hubs like Chicago, New York, LAX, and Detroit.
Disney has purported to indicate some aspects of the service they intend to operate. They intend to carry signature Disney catering items like Mickey Mouse shaped ice cream bars, warm churros, amongst others. Customers will be given an included checked bag if they have booked a Disney resort with a scheduled checkin within 48 hours.
”If You Want to Become a Millionaire…”
Richard Branson and Warren Buffet have terse words regarding the airline business, and both of them know a thing or two about business and trying to make money from flying tin.
“If you want to be a Millionaire, start with a billion dollars and launch a new airline.” – Richard Branson, 2001
Warren Buffett isn’t positive about the airline business either, in fact, his words are much stronger. While his business now owns substantial stakes in US carriers, he has been bearish on them in the past.
“Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”
The truth is that the airline business is hard and always has been. It’s so hard that when a CEO says the business will never lose money again, it’s cause for laughter. Why is Disney getting into a side of the business where it has, historically, been difficult to succeed?
Best Idea: Controlling the Experience
Control
Everything within Disney parks is fairly well captured. Food and beverage, entertainment, toys and souvenirs, ticketing and even photography are all controlled and sold by Disney. This is particularly advantageous when it comes to hotels the brand owns by which they can extend the experience to breakfast with characters and special access to the park. Disney also charges a premium for such properties.
Airlines can fly from almost any dot on the map to Orlando and make money all year long. This isn’t solely due to Disney but it’s a big part of lasting success of routes to MCO.
Incentivize Slow Periods, Capitalize on High Season
By owning every segment of the customer experience (flights, hotels, parks, and restaurants) Disney can sell complete end-to-end experiences where they control the entire experience, pricing and consumer spend. This will give the brand the ability to market and sell flights profitably in busy seasons and cheaply in slower seasons.
Filling seats on airplanes during slow season will put heads in beds, and butts in seats on rides and in restaurants too. Not only will that lead to more control of the experience and pricing, but keep costs in-house instead of depending on airlines who are focusing elsewhere on their business.
Premium
Disney commands a premium for their products – not just the parks and hotels, but all their products. For example, take a look at the price of their movies sold on the iTunes store. A good sale is $10 each, but often they are priced at $20 and never really move.
Disney has done a great job of perfecting their experience and people have been conditioned to pay more for Disney. Being able to start the Disney experience earlier, and knowing the quality of product and services will lead customers to pay more for a complete experience.
Worst Idea: The Airline Business
Disney’s stock has been on a tear lately. I pay attention to it solely from an interest in business and that my parents gave my daughter some shares as an investment plan when she was born because they thought it’d be a brand she’d take interest in. This year it’s up 40%+ and has hit several all-time highs.
There’s nothing worse for a successful company than starting an airline and this idea is bad for a number of reasons.
Routes
The carrier is flying to hub cities for carriers that already bring in hundreds of travelers every year. Those travelers already have many direct options from their cities, lots of competition and would go seemingly unnoticed in the marketplace.
Take Chicago for example. Currently, customers have a choice of 11 Saturday non-stop flights from O’Hare on United (5), American (4), Spirit (1), and Frontier (1) on equipment as large as a 757-300 and no smaller than a 737-800. But that seems like child’s play to the near shuttle service Southwest operates out of Midway with their nine non-stop flights and three “direct flights.”
Without doing a separate search for the Los Angeles market (LAX, BUR, SNA) or the New York City market (LGA, JFK, EWR) it seems absolutely perplexing that the environment Disney would choose first would be the most saturated with seemingly insurmountable competition.
Market Saturation
Even if Disney chose medium-sized markets with limited flights to Orlando, they’d still compete with price-conscious travelers that will connect in those same hubs with established carriers for presumably cheaper prices. Looking out in the near future (as of publication, less than one week notice, Friday, July 26th, 2019) non-stop roundtrips start at $282 in basic economy, $382 for standard economy.
As soon as August 14th (close-in, high season booking) you can snag seats for $99 roundtrip on Frontier. Even after adding in all the fees (checked bag for each family member, seat selection, etc.) families will still be able to stay under $200 per head.
And this is summer on short notice. Why on Earth would Disney want to join that market?
Equipment
Buying regional carriers is vague but putting in some inference I would assume these will be struggling charter carriers that have already passed the hardest part, securing their commercial operating certificate. Assuming that to be the case, the equipment they’d buy would not likely be new aircraft. That means the Disney fleet will likely be full of older model 737s and A320s that will require higher maintenance and be less fuel-efficient than more recent models.
My Take
The Disney stock (DIS) is having its best year in recent history. They completed a merger with Fox and now own the Marvel franchise among others. They have a monster year of releases including Aladdin, Dumbo, Frozen 2, and Toy Story 4 among others. They opened twin park additions with Star Wars Galaxy Edge this year in Disney World and Disneyland. They have also worked on and are planning to soon launch a Disney streaming service – which we will add for our five-year-old without even knowing what it will cost or include.
Their hubris has gone a step too far. In a year where Disney can’t seem to lose, they are getting into a business that is notoriously difficult for experienced operators in excellent environments. Launching to highly competitive markets with low revenue, older planes and no experience seems like a recipe for disaster.
What do you think? Would a Disney airline a great fit or a terrible business move? Would you pay more to fly a Disney airline for the added experience?
The only way this would work is if they provide a substantially better experience, which requires substantially higher fares that people are willing to pay. They can do that with cruises, but airlines are a different game. The obvious problem will be a premium fares with a LCC level of redundancy during IRROPS.
I would agree with this.
Warren Buffett isn’t positive about the airline business either, in fact, his words are much stronger,
“Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”
Have you checked Berkshire’s 13Fs lately?
His investment strategy has evolved, I have edited the post to reflect this.
I’d say their advantage over the airlines is the integrated booking experience. If I go to disney.com and want to book a trip for a family of 5, they can quote the whole experience with add-one, etc. This has been popular with all of the OTA’s for years, with the airlines pushing those integrated packages as well. I think they will be moderately successful in the endeavor but it won’t be huge.
I travel to Disney World at least once a year , this year we are going twice and going on a Disney cruise …. our trips are largely based on airline prices …. our family motto is “when the price is low, Disney is a go”… I would assume that most families and individuals planning for a Disney vacation are already spending an arm and a leg and are looking for save money anywhere they can and they would include flights…. most people that read this blog will use points to save money , so a premium flight to MCO would never cross their minds
Disney has announced no such thing. Right now this is just an unsubstantiated rumor from a notoriously unreliable Disney rumor/news site.
I wasn’t aware the source is unreliable. I cannot also confirm that it’s not true so I will add language to the post that denotes this has not been verified.
Kyle… this isn’t a real story, Disney is not starting their own airline. This Onion-style headline/story came from a site that also said that Disney and Tesla have agreed upon a sponsorship for the Tomorrowland Speedway to swap out gasoline cars for all electric and another headline that said that Disney parks will all start operating 24/7 to help increase revenue and reduce crowding… Did you do any kind of journalistic investigation on this topic to remotely confirm any aspect of it? Enjoy the clicks and traffic but wow…
@Ryan – I have added language that I didn’t personally verify the story, I posted my source, however, one that you have decided is untruthful, I don’t know that to be the case. While I didn’t mention the Tomorrowland story with Tesla, if you look around the web, you will find that some reputable sources also published that story too before Disney came out and denounced it publicly. Disney has not denounced the Disney Airline story so I would infer that either the denial is coming or that it is, in fact, true – something you can’t claim to know as a falsehood.
Lastly, while I do my absolute best to put out accurate information, it’s not always possible. Just this week, I reached out to a PR rep for American about a story, someone with whom I have communicated in the past- they did not return my request for comment. I am a blogger, not a journalist but we do offer a 100% money-back guarantee at Live And Let’s Fly, so feel free to file a claim for a refund.
A Disney airline would be a terrible idea. Better yet is if Disney were able to co-brand like EVA does with Hello Kitty. Then it would be “fun, thank us, IRROPS, blame Delta, not our fault”
This is a tremendous idea
If this is real, and they kept it relatively small, it’s not as terrible of an idea as you might think. As you mention, Disney (particularly at Walt Disney World) has invested a lot in infrastructure to control the guest experience whether from the hotels, to the Fastpass bands that track everything you do at the park, to the Magical Express busses (a free perk for those staying at the on-site hotels) that make the entire experience seamless from the moment you arrive at MCO to the moment you leave WDW. Disney has managed to get people to pay exorbitant amounts of money for their hotels through things like the Magical Express and other perks like being able to make Fastpass/Dining reservations far earlier than visitors who stay off-site and just the convenience and “added magic” of staying on-site. Despite the fact that many off-site hotels are located just as close if not closer to some of the parks (depending on which park and which hotel) and offer similarly convenient transportation to and from the parks while offering a nicer hotel experience for less, people are still willing to spend a lot more for the on-site experience, which is often not much better than an average Hilton/Marriott. At the most expensive hotels during high season, the prices can top $700-800 per night for a standard room (going upwards of $1000 per night for a standard room that has a view/concierge services) and even then they are regularly at 100% occupancy throughout the year.
There are many people out there willing to pay extra for a seamless, fully-integrated experience that immerses you in Disney as soon as possible and for as long as possible. Also, WDW has become so big and complicated that many people would be willing to pay for the convenience of the seamless experience. I wouldn’t be surprised to see this work if they targeted big cities and had, at most, one or two daily flights on smaller planes because they could almost certainly get away with charging a premium over traditional airlines. That said, it would probably be more efficient and cost-effective to partner with a traditional airline to operate a subfleet of Disney branded flights to Orlando where they control something like half-3/4s of the tickets to sell directly to those booking on-site hotel/park ticket packages through Disney. Or even provide special ground services at the departure airports like tagging your bags all the way to your hotel or a Disney branded lounge where you could pick up your Fastpass bands (which now control all things like park tickets and room keys and dining reservations, in addition to the Fastpass services that provide shorter wait times) and check-in early to your hotel room or something.
I wouldn’t be surprised if someone at Disney wasn’t at least looking into ways to somehow extend their reach past the arrivals area of MCO and actually onto planes/departure airports. The Magical Express busses have been very successful for Disney (go to any Disney World board and you will see people discussing how that factor was influential in their decision to stay on-site). They are always looking for ways to more completely control the experience and it would not be surprising to see them try to expand to the air travel component in one way or another, even though starting an airline would probably be too far for the reasons you noted.
If this is true (I suspect this is fake news), I could possibly see this working on a small scale, charter-type operation as part of a Disney vacation package. I.e. Disney packages theme park tickets, a week’s stay at a Disney resort, and airfare on Disney Air as part of an all-inclusive experience. I could see Disney fanatics being willing to pay a premium for the convenience, and it would allow Disney to limit flights to say 2-3x a week, or basically renting unused block time from the regionals and then applying a substantial but opaque markup when they roll the cost into the package.
If this truly is an attempt to start a scheduled airline operation, though, then I need to get busy shorting DIS stock, because what could possibly go wrong?
Hooters Air, part 2.
That paragraph using Chicago as an example is missing the destination. Where are these flights going? Orlando? Orange County?
Disney bought the regional carrier only for their AOC. I suspect they will run flights to those 4 major metropolitan markets only during low seasons to help putt bodies in their resorts’ beds and butts in seats on their rides as you rightly pointed out, Kyle. During the high seasons those flights will move to somewhat underserved metro markets (think Montreal to MCO nonstop or Calgary/Edmonton to SNA nonstops during Christmas/New Year festive season). I bet this Disney airline will operate more like a charter operation (where air tickets will get bundled along with hotels and park admissions) rather than a normal, scheduled commercial airline. Plus, those aircrafts would be a useful arsenal to help Disney sell more cruise packages too.
Disney actually floated this idea back when the Disney World was being built. I believe it was Walt’s idea, before he died. They even built a runway at the park, and was used originally for corporate flights. The runway remained until last year (used as a road and storage). So it isn’t a far fetched idea, but it isn’t a good one either. They probably could have made it work back in the 70’s, but I doubt it would have survived past deregulation. At the end of the day they have to be “cheap,” like Southwest. They will have to offer free checked baggage like SW, if not it won’t succeed. Only the most hardcore Disney fan will buy a seat on the plane, if it costs more than the competition. Also you know United, AA, SW, probably Jet Blue and Alaska will under cut them. Especially since they want to fly to LA, NYC, Chicago as you stated. While this is a rumour, I wouldn’t be surprised if they do it, or take the idea very far.
I read this and had to laugh. I remember when Carnival Cruise Lines started an airline and what a disaster that was. Also the link to the source article is dead.
Considering Disney to be one of smartest companies in travel, I speculate that Disney would partner with a full service airline, like they have in the past. Years ago, it was Eastern and then Delta. But they haven’t had an official airline for almost 20 years. Allegiant does well with their mostly Las Vegas flights. So, who knows? But the downside is huge. So many foreigners go to WDW now. I can’t see how this could be a profitable effort. Because Disney is all about the benjamins!
Bad, bad, bad idea — one mishap with a plane full of kids, parents and grandparents would be poison for the brand. Nothing like images of fuselage with…I’ll leave the imagery to your individual imaginations. And then of course there’s the liability. This is not what the Happiest Place on Earth needs.
As someone who did voice-overs for Disney for some years, I will have to brush up on the new script: “Welcome aboard the ‘Disney Airline’, designed and build for Walt Disney World by ‘Boeing Aircraft Corporation’. Please keep your hands and feet inside the ‘plane’! No smoking with the ‘plane’ is in motion. ‘Enjoy your Mickey Mouse flying experience and don’t act Goofy or we will have to …….”
Disney has issued a statement denying the rumor, and the source article was taken down.
Thanks for the heads up Sven. I put in a new preamble because I want to set the record straight but I am keeping the post live because the essence of the piece is whether it is a good or bad idea. Had I wrote an article titled: “Rumors of Disney Airline: Best or Worst Idea” the rest of the content would be generally the same and it’s a reasonable thought experiment.
Here’s the disclaimer at the top: ***Disney has since denied any plans to start an airline, however, I am keeping this post active because the ideas explored (should they start an airline) remain valid if they were to start an airline. In the introduction, I mentioned “it’s been reported” or “announced” which remains correct. I also wrote “if true” as Disney had not yet confirmed it publicly.***
My 17 year old Daughter Heard that Disney was starting an airline after she had decided to be a flight attendant when she graduates from high school. Now her dream is to be an attendant for Disney. Would you happen to have a link to explore that possibility?
This has been put back in the “rumor” category. While Disney may be considering it, their plans to launch are neither public nor available at this time.